Jaguar Mining Reports Q2 2010 and YTD 2010 Earnings

Jaguar Mining Inc. ("Jaguar" or the "Company") (JAG: TSX/NYSE) reports its financial and operational results for the period ended June 30, 2010. All figures are in U.S. dollars unless otherwise indicated.

Q2 2010 Highlights
- Q2 2010 net loss of $5.9 million or ($0.07) per basic and fully
diluted share compared to net income of $9.7 million or $0.12 per
basic and fully diluted share in Q2 2009. Net income for Q2 2010 was
adversely impacted by significantly higher cash operating costs
caused by higher-than-planned dilution at its underground mines,
especially at Turmalina.
- Q2 2010 gold sales decreased to 30,646 ounces at an average price of
$1,203 per ounce yielding revenue of $36.9 million compared to Q2
2009 gold sales of 35,561 ounces at an average price of $922 per
ounce and revenue of $32.8 million.
- Q2 2010 gold production totaled 30,586 ounces at Turmalina and
Paciência at an average cash operating cost of $746 per ounce
compared to 35,806 ounces at an average cash operating cost of $447
per ounce during the same period last year (see Non-GAAP Performance
Measures). The 15% drop in gold production and the net increase in
cash operating costs from the prior year were attributable to a
significant decrease in run-of-mine ("ROM") grades, primarily caused
by abnormally high dilution.
- Q2 2010 average feed grade was 3.17 g/t compared to 4.18 g/t during
Q2 2009. The Company continued to encounter geo-mechanical issues at
level 3 in the Turmalina Ore Body A ore shoot, which resulted in
dilution averaging 30%, double what was planned. As a consequence,
less ore was shipped from Ore Body A to the Turmalina Plant.
Management believes this will continue to have an impact on the
grades and production at the Turmalina operation through the balance
of 2010 until the development of level 4 is completed and employing
the new mining method.
The decision was made in early 2010 to change the mining method from
selective stoping to cut-and-fill at level 4 and below in the
Turmalina Ore Body A. This changeover has been slower than planned
due to geo-mechanical issues, specifically in developing the access
ramp within level 4 of Ore Body A. Management has tested and believes
these modifications will significantly contribute to higher ROM
grades in early 2011. A complete review and reconciliation of the
grades mined and processed, compared to what was anticipated from the
block model, confirms there is no change in the overall geology, i.e.
no decrease in in-situ grades. The primary issue is fully
implementing different mining techniques.
- Q2 2010 gross profit decreased to $2.1 million from $9.1 million in
Q2 2009.
- Q2 2010 cash provided by operating activities (see non-GAAP measures)
was $4.5 million compared to $12.6 million in Q2 2009. The decrease
was primarily due to the higher average operating cash costs.
- The formal inauguration of the Company's Caeté gold operation took
place on June 23, 2010. The Caeté Plant was completed in late May and
the crushing circuit was activated on May 25, 2010. Testing of the
milling circuit was conducted in early June and the plant was charged
with ore on June 12, 2010, formally entering the commissioning phase.
- Jaguar invested $36.5 million in growth projects in Q2 2010 compared
to $20.1 million invested in Q2 2009.
- As of June 30, 2010 the Company held cash holdings of $65.4 million,
including $5.9 million in short-term certificate of deposits and
$0.9 million of restricted cash.

Commenting on the Q2 2010 results, Daniel R. Titcomb, Jaguar's President and CEO stated, "Our second quarter operational and financial performance was sharply below our plans as a result of geo-mechanical rock issues at the Turmalina operation. To overcome this issue, our technical team has been changing the mining method from selective stoping to cut and fill, however at a slower pace than planned. We are confident the transition to a cut-and-fill method will decrease dilution and lead to improved feed grades into the plant. Although still early, we are achieving sharp improvements in the limited number of cuts mined during July with overall dilution now running approximately 12 to 15%. However, we will not have the new development and sequencing in-place until later this year required to increase the tonnage from the primary ore body at Turmalina to meet our previous targets."

Mr. Titcomb added, "Our plan to reach mid-tier status remains intact. However, we will not be in a position to provide updated production and CAPEX figures until our engineering team completes the review of new technologies that management believes should sharply reduce our capital requirements and lower our operating costs. This analysis will be completed later this fall. Based on our present mine plans, which include the changes in mining methods at Turmalina, feed grades should improve in 2011. Moreover, with the contribution of the Caeté operation, which is ramping-up as anticipated, we estimate 2011 gold production could rise nearly 40% over this year's revised outlook."

1st Half 2010 Highlights
- Net loss of $10.5 million or ($0.13) per basic and fully diluted
share for the six months ended June 30, 2010 compared to net income
of $14.5 million or $0.20 per basic share and $0.19 per fully diluted
share for the same period in 2009. The net loss for 2010 was
unfavorably impacted mostly by higher costs on fewer ounces sold
during Q2 2010 but also by the requirement to recognize non-cash
interest expense associated with Jaguar's 4.5% senior convertible
notes, which totaled $4.0 million for the first half of 2010.
- First half 2010 gold sales totaled 67,535 ounces at an average price
of $1,148 per ounce yielding revenue of $77.5 million compared to
gold sales of 71,440 ounces at an average price of $925 per ounce and
revenue of $66.1 million for the same period in 2009.
- First half 2010 gold production totaled 61,810 ounces at Turmalina
and Paciência at an average cash operating cost of $671 per ounce
compared to 68,675 ounces at an average cash operating cost of $434
per ounce during the same period last year (see Non-GAAP Performance
Measures). The Company's gold production for the six months ended
June 30, 2010 decreased 16% from the comparable period in 2009 due
largely to the shutdown of oxide leaching operations at Sabara and
the geo-mechanical issues at Turmalina.
- Gross profit for the six months ended June 30, 2010 decreased to
$9.5 million from $20.4 million during the same period in 2009.
- Cash provided by operating activities during the first half of 2010
totaled $11.2 million compared to $19.3 million during the first half
of 2009.
- Jaguar invested $73.4 million in growth projects during the first
half of 2010, up from the $25.6 million invested during the same
period in 2009. The development of the new Caeté operation
represented the largest investment during the first half of 2010.
- The Company achieved underground development targets of 9.2 km for
the six months ended June 30, 2010; on plan.
Summary of Key Operating Results
The following is a summary of key operating results:
Three Months Ended Six Months Ended
June 30 June 30
--------------------------------------------------------
2010 2009 2010 2009
--------------------------------------------------------
(unaudited)
($ in 000s, except
per share amounts)
Gold sales $ 36,853 $ 32,786 $ 77,522 $ 66,072
Ounces sold 30,646 35,561 67,535 71,440
Average sales
price $/ounce 1,203 922 1,148 925
Gross profit 2,098 9,111 9,467 20,405
Net income (loss) (5,913) 9,724 (10,518) 14,483
Basic income
(loss) per share (0.07) 0.12 (0.13) 0.20
Diluted income
(loss) per share (0.07) 0.12 (0.13) 0.19
Weighted avg. No.
of shares
outstanding -
basic 84,128,483 77,957,007 84,062,278 73,315,017
Weighted avg. No.
of shares
outstanding -
diluted 84,128,483 79,787,135 84,062,278 74,685,075

Additional details are available in the Company's filings on SEDAR and EDGAR, including Management's Discussion and Analysis of Financial Condition and Results of Operations and Interim Consolidated Financial Statements for the period ended June 30, 2010.

2010 Outlook

The Company's production and cash operating cost estimates for 2010 are shown below.

The Company has included the non-GAAP performance measures discussed below in this press release. These non-GAAP performance measures do not have any standardized meaning prescribed by Canadian GAAP ("GAAP") and, therefore, may not be comparable to similar measures presented by other companies. The Company believes that, in addition to conventional measures prepared in accordance with GAAP, these non-GAAP measures provide certain investors with additional information that will better enable them to evaluate the Company's performance. Accordingly, these Non-GAAP measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared with GAAP.

The Company has included cash operating cost per ounce processed because it believes these figures are a useful indicator of a mine's performance as they provide: (i) a measure of the mine's cash margin per ounce, by comparison of the cash operating costs per ounce to the price of gold; (ii) the trend in costs as the mine matures; and, (iii) an internal benchmark of performance to allow for comparison against other mines. Cash provided by operating activities has also been included as an overall measure of cash generation capability on a standardized basis. The definitions for these performance measures and reconciliation of the non-GAAP measures to reported GAAP measures are set out in the following tables.

The following tables are included in Jaguar's audited financial statements as filed on SEDAR and readers should refer to those filings for the associated footnotes which are an integral part of the tables.

The Company will hold a conference call tomorrow, August 10 at 10:00 a.m. EDT, to discuss the results. Management will review a presentation during the conference call that includes graphics concerning the second quarter's performance and details concerning the current initiatives at the Company's operations. The presentation can be downloaded from the Company's website at www.jaguarmining.com.

Jaguar is one of the fastest growing gold producers in Brazil with operations in a prolific greenstone belt in the state of Minas Gerais and has plans to develop the Gurupi Project in northern Brazil in the state of Maranhão. Jaguar is actively exploring and developing additional mineral resources at its approximate 575,000-acre land base in Brazil. Additional information is available on the Company's website at www.jaguarmining.com.

The Company uses the financial measure "adjusted cash flows from operating activities" to supplement its consolidated financial statements. The presentation of adjusted cash flows from operating activities is not meant to be a substitute for cash flows from operating activities presented in the statement of cash flows in accordance with GAAP, but rather should be evaluated in conjunction with such GAAP measures. Adjusted cash flows from operating activities is calculated as operating cash flow excluding the change in non-cash operating working capital. The term adjusted cash flows from operating activities does not have a standardized meaning prescribed by Canadian GAAP, and therefore the Company's definitions are unlikely to be comparable to similar measures presented by other companies. The Company's management believes that the presentation of adjusted cash flows from operating activities provides useful information to investors because it excludes certain non-cash changes and is a better indication of the Company's cash flow from operations. The non-cash charges excluded from the computation of adjusted cash flows from operating activities, which are included in the Statements of Cash Flows prepared in accordance with Canadian GAAP, are items that the Company does not consider to be meaningful in evaluating the Company's past financial performance or the future prospects and may hinder a comparison of its period to period cash flows.

Forward Looking Statements

Certain statements in this press release constitute "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and Canadian securities legislation. This press release contains forward-looking statements, including statements concerning, expected grades, revenue and cash flow and estimates for 2010, production and cash operating cost outlooks. Forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual timing of commissioning, production and results of operations to be materially different from any future results or performance expressed or implied by the Forward-Looking Statements. These factors include the inherent risks involved in the exploration and development of mineral properties, the uncertainties involved in interpreting drilling results and other geological data, fluctuating gold prices and monetary exchange rates, the possibility of project cost delays and overruns or unanticipated costs and expenses, uncertainties relating to the availability and costs of financing needed in the future, uncertainties related to production rates, timing of production and the cash and total costs of production, changes in applicable laws including laws related to mining development, environmental protection, and the protection of the health and safety of mine workers, the availability of labour and equipment, the possibility of labour strikes and work stoppages and changes in general economic conditions. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking information, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. These forward-looking statements represent the Company's views as of the date hereof. Subsequent events and developments could cause the Company's views to change. The Company does not undertake to update any forward-looking statements, either written or oral, that may be made from time to time by or on behalf of the Company subsequent to the date of this discussion other than as required by law. For a discussion of important factors affecting the Company, including fluctuations in the price of gold and exchange rates, uncertainty in the calculation of mineral resources, competition, uncertainty concerning geological conditions and governmental regulations and assumptions underlying the Company's forward-looking statements, see the "CAUTIONARY NOTE" regarding forward-looking statements and "RISK FACTORS" in the Company's Annual Information Form for the year ended December 31, 2009 filed on System for Electronic Document Analysis and Retrieval and available at http://www.sedar.com and the Company's Annual Report on Form 40-F for the year ended December 31, 2009 filed with the United States Securities and Exchange Commission and available at www.edgar.com.

Investors and analysts:
Bob Zwerneman, Vice President Corporate Development and
Director of Investor Relations,
603-224-4800,bobz@jaguarmining.com;